Quickly Removed From The Top Shelf: Best Buy's CEO

We’re inclined to go along with Phil Rosenthal’s take on the resignation of Best Buy CEO Brian Dunn yesterday. The Chicago Tribune columnist
says it “occasioned an existential quandary of sorts, what with the consumer electronics chain already in adapt-or-die mode because of, well, consumer electronics.”

And then,
without ado, Rosenthal contemplates the possible hereafter: “If it becomes necessary to bury the big-box stores, where will they be able to buy a coffin large enough? And will they be able to
resist the urge to shop for that bigger box online?”

Let’s push the clock back a couple of weeks and look at how another of our sagest sources of philosophical punditry, the
New York Post, summed up Dunn’s quandary-of–the-moment, which was “Battered Best Buy’s Big Boxes Too Darn Big.”

Contemplate that for a moment. Talk about a Gordian Knot; the horns of a dilemma. Big is your essence. Big is your problem.

“Looking to avoid the fate of rival Circuit City,
which closed its doors in 2009, the struggling retailer said it’s closing 50 of its 1,100 stores -- a move that many critics called long overdue and some called too little, too late,” the
Post’s James Covert wrote on March 30.

“We’re clearly going to have more doors and less square footage,” Dunn said as he revealed his plans to cut $800 million
in operating expenses and use the savings to train sales associates.

But Dunn and Best Buy were dealing with a different problem yesterday –- an unspecified “personal” one.
After leaving shareholders (and reporters) dangling as to the whys and wherefores of Dunn’s abrupt departure from HQ for much of the day, the company issued a late statement:

"Certain issues were brought to the board's attention regarding Dunn's personal conduct, unrelated to the company's operations or
financial controls, and an audit committee investigation was initiated. Prior to the completion of the investigation, Mr. Dunn chose to resign."

Speaking of pithy insights (and mind over what
really matters), the hed atop Maureen O’Gara’s SYS-Con Media story reads: “Ah, Scandal at Boring Old Best Buy,” followed by,
“Imaginations can now run rampant since the company won’t explain what it’s talking about.”

While our imaginations take their diversionary paths, let’s take a
look at the very real problems confronting all those Best Buy bricks held together by mere mortar and how Dunn’s resignation may be a good thing for Best Buy in the long run.

Dunn was a
28-year veteran who had risen through the sales ranks and was something of a folk hero among employees. "He was true blue," one source told the Wall Street Journal -– which, Miguel
Bustillowrites,is “a nod to Best Buy's on-floor salespeople, known as the blue shirts. Mr. Dunn's mother was one of the retailer's earliest employees.”

But that
adulation didn’t necessarily carry over to outside observers, who feel that Dunn didn’t have the chops to combat online retailers, such as Amazon, and more innovative retailers, such as
Apple, and was perhaps a little too blithe about the threat of “showrooming.”

"While we know 'showrooming' happens, we continue to be the No. 1 player in consumer
electronics," Bustillo recalls that Dunn said in an interview just last month. "Really, if a customer comes into our store to see something, I like our odds."

On that note, the
Journal’s Ann Zimmerman has a story this morning about the more aggressive strategies retailers such as Target and Walmart are employing to
“thwart” the practice.

Sanford C. Bernstein analyst Colin McGranahan writes that "some investors had been frustrated with Dunn's tenure, given his strong affinity for physical
retailing and perceived slowness to adapt to threats facing the company," Stephanie Clifford points out in the New York Times.

Another source tells
Clifford, by the way, that we should be careful about what we imagine. “We sometimes make assumptions that investigations mean it must be bad, and investigations sometimes end with the
conclusion that it wasn’t,” says Larry C. Drapkin, co-chairman of the labor and employment practice at the law firm Mitchell, Silberberg & Knupp.

"I hate to be rude, but I
think he [Dunn] was doing a terrible job,” Wedbush Securities analyst Michael Pachter tells Reuters’ Dhanya Skariachan “This is a company that had
a sales guy in charge, and I just don't think they are well positioned to deal with the onslaught from the Internet."

G. Mike Mikan, former EVP and CFO UnitedHealth Group and a Best Buy board
member since 2008, is serving as Best Buy’s interim CEO. No one is predicting that he’ll stay in that position for very long, although Claire Koeneman, an external spokeswoman for Best
Buy, maintains he will be considered for the job.

“I don’t think [Mikan] adds any value at all,” Pachter tellsCFO
Journal’s Maxwell Murphy, saying he “has zero retail experience, has no relevant experience in dealing with a threat from Internet retail, and is unlikely to make any meaningful
changes.”

If Best Buy's Board doesn't put a REAL strategist in charge - that understands the market shift which killed Circuit City and inherently undermines the old Best Buy success formula - Best Buy will not survive

Thom Forbes has written about marketing and media for more than 25 years. He was editorial director of Adweek and its sister publications in the 1980s and has covered the beat as a freelancer since 1990. For more than three years, he wrote Around the Net in Brand Marketing for MediaPost.